US Measures Against Chinese-Built Ships Could Ban 60% of the Global Fleet

The tanker market could face significant consequences from potential US measures against Chinese-built ships. In its latest weekly report, shipbroker Gibson said that “this week, many in the shipping industry likely heard about Section 301 of the US Trade Act for the first time. This provision allows the US to address unfair foreign trade practices affecting US commerce. Last year, the US Trade Representative (USTR) launched an investigation into Chinese shipbuilding and maritime practices, concluding in January 2025 that China engaged in unfair practices. As a result, the USTR has published a proposed action plan and is accepting public comments until March 24”.

According to Gibson, “the proposal is highly aggressive, featuring disproportionately high fees. It outlines several complex options targeting Chinese operators and/or China-built vessels, including those on order. The final proposal may incorporate one or more of these measures. Notably, the definition of an “operator” remains unclear – it could refer to an entity that owns or effectively controls a vessel. The vague wording, perhaps intentional, leaves room for interpretation”.

“In terms of measures under the USTR action plan, the first section includes a proposal to charge a Chinese operator a $1mln per US port entry. The second section proposes to charge up to $1.5mln for a port call by any Chinese-built ship. Within this measure, there is also an option to adjust the total fee lower, depending on the percentage of Chinese-built ships in operator’s fleet, although it is unclear whether this is in addition or instead of a flat $1.5mln fee. A third measure targets orders at Chinese yards, with the highest proposed fee set at $1mln for a port call for an operator who has over 50% or 25% of their orderbook at Chinese yards”.

Gibson said that “with 20-25% of the global tanker fleet above 25,000 dwt (excluding LR1/Panamaxes) built in China, tanker operators face significant exposure to these potential changes. Chinese operators are particularly vulnerable, as one section of the proposal specifically singles them out. It is worth noting that Chinese companies own at least 15% of the global VLCC fleet, though their ownership share is considerably smaller in other tanker segments”.

“The market impact will depend on which measures – or combination of measures – are implemented. Measures that focus directly on Chinese operators and/or just Chinese-built ships without reference to an operator’s fleet would likely be less disruptive than those considering an operator’s overall fleet composition. Given that US crude exports and imports account for 9% and 7% of global trade, respectively, and clean exports for 13%, the tanker market has enough flexibility to reallocate Chinese-built or Chinese-owned tonnage away from US ports. However, this will likely cause inefficiencies, initial disruptions, and missed trading opportunities. Freight rates for US-bound voyages may rise due to limited vessel availability. A measure targeting newbuild orders would probably have a similar impact. While the overwhelming majority of tanker orders are at Chinese yards, these orders represent only 11% of the existing fleet, meaning that only certain owners will be affected”, the shipbroker said.

Gibson concluded that “the most disruptive measure would be the one linking penalties to the share of Chinese-built vessels in an operator’s fleet. Currently, over 60% of the global tanker fleet is owned by companies with at least one China-built ship, while 40% of owners have at least 25% of their fleet built in China. If implemented, this measure would have profound implications for US-linked freight rates, arbitrage economics, and even domestic oil and refined product prices. Any version of the USTR final proposal would likely lead to discounted values for Chinese-built ships and a premium for Korean and Japanese vessels, whilst firm orders may be subject to alterations. It may also incentivize operators to split their fleets into smaller entities to minimise US exposure. Much remains uncertain, and a clearer picture will emerge after the March 24 consultation period. Given that this policy is being decided under a Trump administration, the market is understandably concerned that it could take a more aggressive form”.
Nikos Roussanoglou, Hellenic Shipping News Worldwide